What is the primary goal of financial management?

The primary goal of financial management focuses on managing the financial assets of a company to maximize shareholder value. This encompasses making strategic decisions that enhance the firm's worth and profitability over time, including investment decisions, financing strategies, and operational financial management. The idea is to achieve a balance between risk and return while ensuring the organization can pursue growth opportunities that benefit shareholders.

Maximizing shareholder value is generally seen as a long-term objective, which aligns management's efforts with the interests of the owners of the company. This approach drives sound financial choices, ultimately leading to an increase in the company's stock price and dividends, reflecting a successful financial management strategy.

While minimizing expenses, maintaining liquidity, and ensuring compliance with regulations are important aspects of financial management, they serve more as supportive goals or means to achieve the main priority of maximizing shareholder wealth. Each of these aspects contributes to the overall financial health of the organization but does not represent the central objective of financial management itself.